KIDZ 10-Q
KIDZ AI Inc. (KIDZ)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter) |
| ||
(State or other jurisdiction |
| (IRS Employer |
of incorporation or organization) |
| Identification Number) |
| ||
(Address of principal executive offices) |
| (Zip code) |
(
(Issuer’s telephone number including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading symbol(s) |
| Name of each exchange on which registered |
|
| The | ||
|
| The |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
|
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of August 14, 2025, the registrant had
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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3 – Quantitative and Qualitative Disclosures About Market Risk |
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| 2 |
| Table of Contents |
Part I - Financial Information
Item 1 – Financial Statements
CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN US DOLLARS)
|
| June 30, |
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| December 31, |
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| 2025 |
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| 2024 |
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| (Unaudited) |
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ASSETS |
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Current assets: |
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Cash |
| $ |
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| $ |
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Prepayments and other current assets |
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Due from related parties |
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Total current assets |
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Noncurrent assets: |
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Property and equipment, net |
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Intangible assets, net |
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Operating lease right-of-use assets, net |
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Investment accounts |
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Deposit |
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Total noncurrent assets |
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TOTAL ASSETS |
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| $ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
| $ |
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| $ |
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Interest payable |
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Deferred revenues |
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Due to related parties |
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Operating lease liabilities - current |
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Accrued liabilities and other payables |
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Total current liabilities |
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Noncurrent liabilities: |
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Convertible notes payable |
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Operating lease liabilities - noncurrent |
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Deferred tax liabilities |
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Warrant liabilities |
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Total noncurrent liabilities |
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TOTAL LIABILITIES |
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Commitments and contingencies |
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Stockholders' equity: |
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Preferred Stock, $ |
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-Series A, |
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-Series B, |
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Class A Common Stock, $ |
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Class B Common Stock $ |
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Additional paid-in capital |
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Accumulated deficit |
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| ( | ) |
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Total stockholders' equity (deficit) |
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| ( | ) | |
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY |
| $ |
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| $ |
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See accompanying notes to the consolidated financial statements.
| 3 |
| Table of Contents |
CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN US DOLLARS)
|
| For the Three Months Ended June 30, |
|
| For the Six Months Ended June 30, |
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|
| 2025 |
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| 2024 |
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| 2025 |
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| 2024 |
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| (Unaudited) |
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| (Unaudited) |
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| (Unaudited) |
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| (Unaudited) |
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Revenues: |
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Service revenues |
| $ |
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| $ |
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| $ |
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| $ |
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Consulting revenues (related party) |
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| - |
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| - |
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Total revenues |
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Cost of revenues: |
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Cost of revenues |
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Total cost of revenues |
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Gross profit |
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Operating expenses: |
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Selling and marketing |
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General and administrative |
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Research and development |
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Total operating expenses |
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(Loss) from operations |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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Other income (expense) |
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Change in fair value of warrants |
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| ( | ) |
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| ( | ) |
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Change in fair value of crypto assets |
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| - |
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| - |
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Change in fair value of convertible debt |
|
| ( | ) |
|
| - |
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| ( | ) |
|
| - |
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Financing cost |
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| ( | ) |
|
| - |
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| ( | ) |
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| - |
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Staking rewards |
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| - |
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| - |
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Interest and other expense |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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Total other income (expense) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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(Loss) before provision for income taxes |
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| ( | ) |
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| ( | ) |
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| ( | ) |
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| ( | ) |
Provision for income taxes |
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| - |
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| - |
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Net (loss) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Weighted average shares outstanding-Preferred Stock-Series A* |
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Basic and diluted net income per share-Preferred Stock-Series A* |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average shares outstanding-Preferred Stock-Series B* |
|
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| - |
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| - |
| ||
Basic and diluted net income per share-Preferred Stock-Series B* |
| $ | ( | ) |
| $ | - |
|
| $ | ( | ) |
| $ | - |
|
Weighted average shares outstanding-Class A Common Stock* |
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Basic and diluted net income per share-Class A Common Stock* |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
Weighted average shares outstanding-Class B Common Stock* |
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Basic and diluted net income per share-Class B Common Stock* |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
See accompanying notes to the consolidated financial statements.
| 4 |
| Table of Contents |
CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(EXPRESSED IN US DOLLARS)
|
| Preferred Stock-Series A* |
|
| Preferred Stock-Series A amount |
|
| Preferred Stock-Series B* |
|
| Preferred Stock-Series B amount |
|
| Class A Common Stock* |
|
| Class A Common Stock amount |
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| Class B Common Stock* |
|
| Class B Common Stock amount |
|
| Additional Paid-in Capital |
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| Accumulated deficit |
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| Total |
| |||||||||||
Balance at December 31, 2023 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||||
Stock compensation issued for consulting services |
|
| - |
|
|
| - |
|
|
| - |
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|
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|
|
| - |
|
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Net loss |
|
| - |
|
|
|
|
|
| - |
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|
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|
|
| - |
|
|
|
|
|
| - |
|
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|
|
| ( | ) |
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| ( | ) | |||||
Balance at March 31, 2024 (unaudited) |
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
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|
|
| - |
|
|
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|
|
| - |
|
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| ( | ) |
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| ( | ) | |||||
Balance at June 30, 2024 (unaudited) |
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
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| $ | ( | ) |
| $ | ( | ) | ||||||||
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Balance at December 31, 2024 |
|
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| $ |
|
|
| - |
|
| $ |
|
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| $ |
|
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|
| $ |
|
| $ |
|
| $ |
|
| $ | 4,519,154 |
| |||||||||
Net loss |
|
| - |
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|
| - |
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|
| - |
|
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|
|
| - |
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| ( | ) |
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| ( | ) | |||||
Balance at March 31, 2025 (unaudited) |
|
|
|
| $ |
|
|
| - |
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||||||
Net loss |
|
| - |
|
|
|
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (3,866,169 | ) |
|
| (3,866,169 | ) | |
Reverse recapitalization |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,183,392 | ) |
|
| - |
|
|
| (2,183,392 | ) |
Conversion of convertible debt |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
| - |
|
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| |||||||
Common stock issued to SPAC public shareholders |
|
| - |
|
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|
|
| - |
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|
|
| - |
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Capital contribution from private placement |
|
| - |
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|
| - |
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| - |
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Employee stock compensation |
|
| - |
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|
| - |
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|
| - |
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Stock compensation to advisors |
|
| - |
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| - |
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| - |
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Conversion of preferred stock to common stock |
|
| ( | ) |
|
| ( | ) |
|
| - |
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|
| - |
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Issurance of common stock and warrants for intangible assets acquisition |
|
| - |
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|
|
| - |
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|
|
| - |
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Stock issued for waiving contractual restriction |
|
| - |
|
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|
|
|
| - |
|
|
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|
|
| - |
|
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| ||||||||
Balance at June 30, 2025 (unaudited) |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ |
| ||||||||||
See accompanying notes to the consolidated financial statements.
| 5 |
| Table of Contents |
CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN US DOLLARS)
|
| For the Six Months Ended June 30, |
| |||||
|
| 2025 |
|
| 2024 |
| ||
|
| (Unaudited) |
|
| (Unaudited) |
| ||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net (loss) |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
| ||
Amortization of operating lease right-of-use assets |
|
|
|
|
|
| ||
Employee stock compensation |
|
|
|
|
|
| ||
Stock compensation issued for advisory service |
|
|
|
|
|
| ||
Deferred tax liabilities |
|
|
|
|
|
| ||
Change in fair value of warrants |
|
|
|
|
|
| ||
Change in fair value of crypto assets |
|
| ( | ) |
|
|
| |
Change in fair value of convertible debt |
|
|
|
|
|
|
| |
Stock issued for waiving contractual restriction |
|
|
|
|
|
| ||
Staking rewards |
|
| ( | ) |
|
|
| |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
| |
Due from related parties |
|
|
|
|
|
| ||
Prepayments and other current assets |
|
|
|
|
| ( | ) | |
Deposit |
|
| ( | ) |
|
|
| |
Accounts payable |
|
|
|
|
|
| ||
Interest payable |
|
|
|
|
|
| ||
Deferred revenues |
|
| ( | ) |
|
|
| |
Operating lease liabilities |
|
| ( | ) |
|
| ( | ) |
Due to related parties |
|
| ( | ) |
|
| ( | ) |
Accrued liabilities and other payables |
|
|
|
|
|
| ||
Net cash (used in) operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
|
|
| ( | ) | |
Purchases of crypto assets |
|
| ( | ) |
|
|
| |
Purchases of intangible assets |
|
| ( | ) |
|
|
| |
Net cash (used in) investing activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from convertible notes payable |
|
|
|
|
|
| ||
Capital contribution from private placement |
|
|
|
|
|
| ||
Proceeds from the reverse recapitalization |
|
|
|
|
|
| ||
Repayment of promissory notes to related party |
|
| ( | ) |
|
|
| |
Proceeds from promissory notes related party |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net (decrease) increase in cash |
|
|
|
|
| ( | ) | |
Cash, beginning of period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash, end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest |
| $ |
|
| $ |
| ||
Income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Noncash activities: |
|
|
|
|
|
|
|
|
Issuance of common stock and warrants for intangible assets acquisition |
|
|
|
|
| - |
| |
Purchase of crypto assets through convertible debt |
|
|
|
|
|
| ||
Common stock issued for liability payment |
|
|
|
|
|
| ||
Conversion of convertible debt and interest payable |
|
|
|
|
|
| ||
Conversion of preferred stock to common stock |
|
|
|
|
| - |
| |
See accompanying notes to the consolidated financial statements.
| 6 |
| Table of Contents |
CLASSOVER HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2025 AND 2024
(UNAUDITED)
Note 1. Description of the Business and Basis of Presentation
Classover Holdings, Inc. (the “Company”) is a company incorporated on May 2, 2024 under Delaware law as a wholly owned subsidiary of the Battery Future Acquisition Corp., a Cayman Islands exempted Company (the “BFAC”).
On April 4, 2025, upon the closing of the business combination (the “Closing”), BFAC Merger Sub 1 Corp. (“Merger Sub 1”) merged with and into BFAC (the “Reorganization Merger”), with BFAC being the surviving corporation of the Reorganization Merger and becoming a wholly-owned subsidiary of the Company, and then, immediately following the consummation of the Reorganization Merger, BFAC Merger Sub 2 Corp. (“Merger Sub 2”) merged with and into Class Over Inc. (“Classover DE”), with Classover DE being the surviving corporation of the acquisition merger and becoming a wholly-owned subsidiary of the Company.
The Merger is considered as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805-40. Under this method of accounting, BFAC will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based on Classover DE stockholders comprise majority of the voting power of the Company, directors appointed by Classover DE constituting majority of the Company’s board of directors, Classover DE’s operations prior to the merger comprising the only ongoing operations of the Company, and Classover DE’s senior management comprising all of the senior management of the Company.
Accordingly, for accounting purposes, the financial statements of the Company will represent a continuation of the financial statements of Classover DE with the merger treated as the equivalent of Classover DE issuing stock for the net assets of BFAC, accompanied by a recapitalization. The net assets of BFAC will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the merger will be presented as those of Classover DE in financial statements of the Company. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying consolidated financial statements in accordance with ASC 805-50-45-5. All share and per share data has been retroactively restated to reflect the current capital structure of the Company.
Classover DE was formed on March 16, 2022 as a holding company in Delaware, which was 100% controlled by the sole owner Hui Luo. Class Over Inc. (“Classover NJ”) was formed on June 16, 2020 in New Jersey, which was 100% controlled by the sole owner Hui Luo. Classover NJ is an online enrichment program that offers over 20 courses taught by certified instructors. It caters to children aged 4 to 17, providing personalized attention and a supportive learning environment. On April 19, 2022, Classover DE entered into a stock transfer agreement with Classover NJ. After the share exchange, Classover DE owned
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding financial reporting, and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for any other interim period or for the full year of 2025. Accordingly, these statements should be read in conjunction with the Company’s audited financial statements and notes thereto as of and for the years ended December 31, 2024 and 2023.
| 7 |
| Table of Contents |
Note 2. Summary of Significant Accounting Policies
Accounting Principles
The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).
Principles of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation.
Liquidity and Going Concern
As of June 30, 2025, the Company had cash of $
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition
The Company has six predominant sources of revenue: time-based subscriptions, credit-based subscriptions to our online courses, and marketing consulting services.
Subscription Revenue
Customers are required to pay in advance to enroll for courses. For time-based subscriptions, we are obligated to provide students with unlimited access to our course for a specified term. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance. Each contract of the online education service is accounted for as a single performance obligation which is satisfied ratably over the service period. We charge fixed fees for the services contracts. The proceeds collected are initially recorded as deferred revenue. For credit-based subscriptions, revenues are recognized proportionately as the courses are delivered. For time-based subscriptions, revenues are recognized on a straight-line basis over the subscription period from the date in which the students activate the courses to the date of expiration. Refunds are provided to the students who decide to withdraw from the subscribed courses within the course offer period and a proportional refund is based on the percentage of untaken courses to the total courses purchased. Historically, the Company has not experienced material refunds.
| 8 |
| Table of Contents |
Consulting Revenue
The Company also generates revenue from consulting services. The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business. The Company’s performance obligation is to provide consulting services to startup founders for a specific term. Customers are required to prepay the full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized over time on a straight-line basis through the service term.
Principal Agent Considerations
The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who intend to enroll our courses are directed to third-party payment platforms before completing the subscription with us. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue on a gross basis as a principal and records fees paid to third-party payment platforms as cost of revenues.
Deferred Revenue
Deferred revenue mostly consists of payments we receive in advance of revenue recognition. Revenue is recognized over the life of the subscription, or as the delivery of the pre-purchased class sessions occurs. The Company classifies deferred revenue as a short-term liability on the balance sheets as the longest subscription plan is for twelve months and the remaining sessions are expected to be delivered within twelve months or less.
Cost of Revenue
Cost of revenue predominantly consists of streaming services, third-party payment processing fees, and wages for teachers and certain employees engaged in producing the revenue.
Referral Incentives
Referral incentives are course credits that we offer to our customers for referring new customers. The incentives are expensed as incurred when the credits are consummated and the corresponding expenses, which are independent educators’ compensation allocated to service the referral credits, are included in selling expenses
Cash and Cash Equivalents
Cash consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The following table shows the breakout between cash on hand and bank deposits.
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Cash on hand |
| $ |
|
| $ |
| ||
Bank deposits |
|
|
|
|
|
| ||
Total cash shown in the Statement of Cash Flows |
| $ |
|
| $ |
| ||
| 9 |
| Table of Contents |
Deposits
Deposits consist of credit card security deposits, which paid to the bank upon the account open. Management regularly reviews the age of these deposits and changes in payment trends and records an allowance when management believes collection of amounts due are at risk. Accounts considered uncollectible are written off against the allowance after exhaustive efforts at collection is made. As of June 30,2025, there was no allowance for deposits.
Property and Equipment
Property and equipment primarily includes computers and furniture stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years.
Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred.
Investment accounts
Investment accounts consist of cash and crypto assets held for investment purposes. Cash is carried at cost, which approximates fair value due to its short-term nature. The Company has elected to use the weighted average cost (WAC) method to determine the cost basis for its initial recognition of crypto asset holdings. Under this method, the cost of crypto assets sold or exchanged is calculated using the weighted average cost per unit at the time of the transaction. This method is applied consistently across all crypto asset holdings. The Company measures the fair value of its crypto assets subsequently, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. The Company establishes a deferred tax liability if the market value of crypto assets at the reporting date is greater than the average cost basis of the Company’s crypto holdings at such reporting date, and any subsequent increases or decreases in the market value of crypto assets increases or decreases the deferred tax liability. In determining the gain (loss) to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the crypto assets with WAC method.
Intangible assets
Intangible assets acquired by the Company are stated at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses. Amortization of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful life, which is the period over which an asset is expected to be available for use. The estimates and associated assumptions of useful life determined by the Company are based on technical or commercial obsolescence, legal or contractual limits on the use of the asset, and other relevant factors. Both the period and method of amortization are reviewed annually. Intangible assets are not amortized while their useful lives are assessed to be indefinite. Any conclusion that the useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite lives as set out above.
Income Taxes
The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority.
| 10 |
| Table of Contents |
The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at June 30, 2025 and December 31, 2024 related to uncertain tax positions.
Fair Value of Financial Instruments
The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.
The carrying values of cash, accounts payable, deferred revenues, interest payable, due to related parties, and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature.
Research and Development Costs
Research and development expenses are expensed as incurred and include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
Segment Information and Geographic Data
FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for details on the Company’s business segments.
The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the CEO, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company determined that it has only one operating segment and therefore one reportable segment as defined by ASC 280.
Advertising Costs
Advertising costs amounted to $
Contingencies
The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated.
If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed.
Operating Leases
Effective January 1, 2022, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the practical expedients that does not require the Company to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. On November 1, 2022, the Company recognized approximately $
| 11 |
| Table of Contents |
The Company determines if a contract contains a lease at inception. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty. The Company’s real estate sublease has been classified as an operating lease.
Since the implicit rate for the Company’s sublease was not readily determinable, the Company used its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception; therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Our sublease does not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and includes the associated operating lease payments in the undiscounted future pre-tax cash flows.
Earnings (loss) per Share
The Company computes earnings (loss) per share (“EPS”) in accordance with FASB ASC 260, “Earnings per Share”. ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary shares outstanding for the period. Diluted EPS presents the diluted effect on a per share basis of the potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. For the three and six months ended June 30, 2025 and 2024, the convertible notes payable were excluded from the calculation of diluted EPS as their inclusion would have been anti-dilutive.
Recently Adopted Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which modifies the measurement of expected credit losses of certain financial instruments. This new guidance was effective for private companies for fiscal years beginning after December 15, 2021, but early adoption was permitted. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”). ASU 2023-08 requires in-scope crypto assets (including the Company's bitcoin holdings) to be measured at fair value in the statement of financial position, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. ASU 2023-08 also requires certain interim and annual disclosures for crypto assets within the scope of the standard. The Company adopted this guidance effective January 1, 2025.
| 12 |
| Table of Contents |
Note 3. Property and Equipment, net
Property and equipment consists of the following as of June 30, 2025 and December 31, 2024:
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
Computers and electronic equipment |
| $ |
|
| $ |
| ||
Furniture and fixtures |
|
|
|
|
|
| ||
Leasehold improvements |
|
|
|
|
|
| ||
Total property and equipment |
|
|
|
|
|
| ||
Less: accumulated depreciation |
|
| ( | ) |
|
| ( | ) |
Total property and equipment, net |
| $ |
|
| $ |
| ||
Depreciation expense was $
Note 4. Investment accounts
Investment accounts consist of cash and crypto assets held for investment purposes. Cash is carried at cost, which approximates fair value due to its short-term nature. The Company accounts for its crypto assets, which are currently comprised solely of Solana, as indefinite-lived intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other and ASU 2023-08. The Company’s crypto assets are initially recorded at cost and subsequently are measured at fair value as of each reporting period. The Company determines the fair value of its crypto assets in accordance with ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on the Coinbase exchange, the active exchange that the Company has determined is its principal market for bitcoin (Level 1 inputs). Changes in fair value are recognized in the Company’s consolidated statement of operations.
The following table summarizes the Company’s digital asset holdings, as of:
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
Number of Solana |
|
|
|
|
|
| ||
Crypto asset carrying value |
| $ |
|
| $ |
| ||
Unrealized gain (loss) on crypto assets |
|
|
|
|
|
| ||
Staking rewards |
|
|
|
|
|
| ||
Cash |
|
|
|
|
| - |
| |
Total investment accounts |
| $ |
|
| $ |
| ||
Note 5. Intangible Assets
On June 30, 2025, the Company acquired certain intellectual property rights and trademarks (“IP”) with fair value $
| · | Cash consideration of $1,250,000; |
| 13 |
| Table of Contents |
| · | Issuance of |
| · | Issuance of pre-funded warrants to purchase |
| ○ | Expected term: |
| ○ | Expected volatility: |
| ○ | Risk-free interest rate: |
| ○ | Dividend yield: |
The Company accounts for asset acquisitions in accordance with ASC 805-50, Business Combinations – Related Issues. An asset acquisition occurs when a transaction does not meet the definition of a business under ASC 805-10. In such cases, the total cost of the acquisition, including consideration transferred, transaction costs, and other directly attributable costs. No bargain purchase gain is recognized in an asset acquisition.
All equity securities issued in the transaction are subject to a six-month lock-up pursuant to a Lock-Up Agreement entered into on the same date. The acquired IP is recorded as an intangible asset and is being amortized over its estimated useful life of 12 years. Amortization expense related to the acquired IP for the three and six months ended June 30, 2025 was $
Future amortization of the Company’s intangible assets is presented below:
Year ended December 31, |
|
|
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Remaining |
|
|
| |
Total |
| $ |
| |
Note 6. Leases
On November 1, 2022, the Company entered into an operating sublease with a related party Dream Go for its office space located at 450 7th Avenue, Suite 905, New York, NY 10123 expiring on October 31, 2029. On November 1, 2022, the Company recognized approximately $
As of June 30, 2025, the Company’s operating sublease had a remaining lease term of approximately
For the three and six months ended June 30, 2025 and 2024, rent expense for the operating sublease was $
The Company’s sublease obligations as of June 30, 2025 are presented below:
Year ending December 31, |
|
|
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Remaining |
|
|
| |
Total future lease payments |
|
|
| |
Less: Interest |
|
| ( | ) |
Present value of lease liabilities |
| $ |
| |
| 14 |
| Table of Contents |
Future amortization of the Company’s ROU assets is presented below:
Year ended December 31, |
|
|
| |
2025 |
| $ |
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Remaining |
|
|
| |
Total |
| $ |
| |
Subleases
On November 1, 2022, the Company entered into sublease agreements with related parties (1) Dream Legal Group, Inc., (2) Tigerless Health, Inc., and (3) First Cover, Inc. to sub rent portions of its office space located at 450 7th Avenue, Suite 905, New York, NY 10123. These subleases are month-to-month leases starting on November 1, 2022 and ending upon a notice of 30 days from either party.
On July 1, 2024, the Company terminated the subleases with Tigerless Health, Inc, and First Cover, Inc. Sublease income is recognized on the straight-line basis over the lease term. Billed and uncollected operating lease receivables will be included in due from related parties which are stated at their estimated net realizable value.
For the three months ended June 30, 2025 and 2024, the Company’s income from these subleases totaled $
Note 7. Accrued Liabilities and Other Payables
Accrued liabilities and other payables consisted of the following:
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
Credit card payable |
| $ |
|
| $ |
| ||
Payroll tax payable |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Note 8. Income Taxes
The Company had $
|
| For the six months ended June 30, 2025 |
|
| For the six months ended June 30, 2024 |
| ||
Deferred income tax expense |
| $ |
|
| $ |
| ||
Current income tax expense |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
| 15 |
| Table of Contents |
The Company has the following deferred tax assets (liabilities) as of June 30, 2025 and December 31 2024:
|
| As of June 30, 2025 |
|
| As of December 31, 2024 |
| ||
Net operating loss carryforwards |
| $ |
|
| $ |
| ||
Change in fair value of warrants |
|
|
|
|
|
|
| |
Change in fair value of convertible debt |
|
|
|
|
|
|
| |
Other expense temporary difference |
|
|
|
|
|
| ||
Total deferred tax assets |
|
|
|
|
|
| ||
Change in fair value of crypto assets |
|
| ( | ) |
|
|
| |
Deferred tax liability- Depreciation |
|
| ( | ) |
|
| ( | ) |
Allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred tax liability |
| $ |
|
| $ |
| ||
The Company evaluated the recoverable amounts of deferred tax assets, and provided a valuation allowance to the extent that future taxable profits will not be available against which the net operating loss and temporary differences can be utilized. A valuation allowance is provided against deferred tax assets when the Company determines that it is more likely than not that the deferred tax assets will not be utilized in the future. In making such determination, the Company considered factors including future taxable income exclusive of reversing temporary differences and tax loss carry forwards. The Company has provided a valuation allowance for the net deferred tax asset as it is not more likely than not that the asset will be realized.
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the periods ended June 30, 2025 and 2024:
|
| June 30, 2025 |
|
| June 30, 2024 |
| ||
Federal statutory rate |
|
| % |
|
| % | ||
Valuation allowance |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
| ( | )% |
|
| % | |
The effective tax rate for the six months ended June 30, 2025 and 2024 is less than the statutory rate primarily as a result of the valuation allowance for net deferred tax assets.
No uncertain tax benefits have been recorded for the three and six months ended June 30, 2025 and 2024
On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” (the “Act”) was signed into law. The Act includes provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The Company analyzed the provisions of the Act and determined there was no significant impact to its income taxes for the periods presented.
As of June 30, 2025, Classover NJ and Classover Holdings, Inc. has approximately $
The Company’s tax years 2022 and forward generally remain subject to examination by federal and state tax authorities.
| 16 |
| Table of Contents |
Note 9. Related parties
As of June 30, 2025 and December 31, 2024, The Company has related party transactions with the following affiliates and affiliated entities:
Related Party Name | Relationship | |
Hui Luo | Majority owner of the Company | |
Liu Yi | Spouse of Hui Luo | |
Genius Kid Class LLC |
| An entity controlled by Yi Liu |
Dream Legal Group, Inc |
| An entity controlled by Hui Luo |
Ideal Force LLC |
| An entity controlled by Yi Liu |
Dreamgo Inc. |
| An entity controlled by Hui Luo |
Due from related parties
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Dream Legal Group, Inc. |
|
|
|
|
|
| ||
Total due from related parties |
| $ |
|
| $ |
| ||
Due to related parties
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
|
|
|
|
|
|
| ||
Luo Hui-accrued interest on promissory note |
|
|
|
|
|
| ||
Luo Hui – promissory note, due on August 15, 2025; at a rate of 4% per annum |
|
|
|
|
|
| ||
Luo Hui – promissory note, due on June 30, 2026; at a rate of 4% per annum |
|
|
|
|
|
| ||
Yi Liu – promissory note, due on March 17, 2026; at a rate of 4% per annum |
|
|
|
|
|
| ||
Dream Legal Group, Inc-rent income received in advance |
|
|
|
|
|
| ||
Due to Dream Go Inc. |
|
|
|
|
|
| ||
Total due to related parties - current |
| $ |
|
| $ |
| ||
The following table represents related party transactions for the six months ended June 30, 2025 and 2024:
|
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||
Name |
| Business Purpose of Transaction |
| June 30, 2025 |
|
| June 30, 2024 |
|
| June 30, 2025 |
|
| June 30, 2024 |
| ||||
Dream Legal Group, Inc |
| Sublease income |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Dreamgo Inc. |
| Rent expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Genius Kid Class LLC |
| Consulting revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Yi Liu |
| Interest expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Luo Hui |
| Interest expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Totals |
|
|
| $ | 116,199 |
|
| $ | 200,253 |
|
| $ | 232,548 |
|
| $ | 405,506 |
|
Sublease income has been reflected as a reduction of general and administrative expenses in the accompanying consolidated statements of operations.
| 17 |
| Table of Contents |
As of June 30, 2025 and December 31, 2024, the Company has the following ROU assets and operating lease liabilities recognized from related party under ASC 842 (Note 4):
|
|
|
| June 30, 2025 |
|
| December 31, 2024 |
| ||
Dreamgo Inc. | ROU assets |
|
| $ |
|
| $ |
| ||
Dreamgo Inc. | Short term obligation under operating leases |
|
| $ | ( | ) |
| $ | ( | ) |
Dreamgo Inc. | Long term obligation under operating leases |
|
| $ | ( | ) |
| $ | ( | ) |
Note 10. Convertible notes
Conversion of convertible notes in connection with the Business Combination
Convertible notes payable is comprised of the following as of December 31, 2024:
Borrower No. |
|
| Amount |
|
| Interest Rate |
|
| Conversion Cap |
|
| Closing Date |
| Maturity Date |
| December 31, 2024 |
| |||||
| 1 |
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| $ |
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| ||||||
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| 4 |
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| % |
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| 2/7/2027 |
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| 5 |
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| 12 |
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| 13 |
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| 18 |
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| 22 |
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| 23 |
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| % |
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| 24 |
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| % |
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| 25 |
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| 26 |
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| ||||||
| 27 |
|
|
|
|
|
| % |
|
|
|
|
|
|
|
| ||||||
Totals |
|
| $ |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| |||
Upon the closing of the business combination, the above notes $
| 18 |
| Table of Contents |
2025 Convertible Notes
On May 30, 2025, the Company entered into a Securities Purchase Agreement for up to an aggregate of $
The Notes are convertible into Class B common stock of the Company at the option of the holder at an initial conversion price equal to 200% of the closing price of the Common Stock on the trading day immediately prior to the closing date, subject to adjustment as provided for in the Notes. Interest is payable under the Notes at a rate of
Description of Notes:
Issue Date | |
Face Value | $ |
Maturity | |
Coupon | |
Conversion Price | Initially $ |
Floor Price | $ |
Redemption | |
Use of Proceeds |
The Company elected the fair value option for the Notes. The fair value of the Notes are remeasured at each balance sheet date and any changes are recorded in the consolidated statements of operations. For the three and six months ended June 30, 2025, the Company recorded a change in the fair value of the Notes in the amount of a loss of $
Note 11. Warrant Liabilities
In connection with the Reorganization Merger, the Company has assumed
Each whole warrant entitles the holder to purchase one ordinary share at a price of $
The Company may redeem the warrants at a price of $
| 19 |
| Table of Contents |
The Company accounts for the
The following table presents the changes in the fair value of warrant liabilities:
Fair value as of April 4, 2025 (Reorganization Merger Date) |
| $ |
| |
Change in fair value |
|
|
| |
Fair value as of June 30, 2025 |
| $ |
|
Note 12. Recurring fair value measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP (as defined in Note 2) establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers consist of:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The following tables present fair value information as of June 30, 2025, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:
June 30, 2025 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| |||
Assets: |
|
|
|
|
|
|
|
|
| |||
Investment- Crypto asset |
| $ |
| $ |
|
| $ |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities |
| $ |
|
| $ |
|
| $ |
| |||
Convertible notes payable |
| $ |
|
| $ |
|
| $ |
| |||
| 20 |
| Table of Contents |
Note 13. Segment information and revenue analysis
The Company follows ASC 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decisions about allocating resources to each segment and evaluating their performances. The Company has one reporting segment. The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company and hence the Company has only one reportable segment. The Company does not distinguish between markets or segments for the purpose of internal reporting.
Disaggregated information of revenues by stream are as follows:
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, 2025 |
|
| June 30, 2024 |
|
| June 30, 2025 |
|
| June 30, 2024 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Time-based subscriptions |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Credit-based subscriptions |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Marketing revenues (related party) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total revenues |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Note 14. Commitments and Contingencies
Legal Proceedings
The Company may be involved in various claims and legal actions arising in the ordinary course of business. The Company establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. At June 30, 2025, the Company was not involved in any material legal proceedings regarding claims or legal actions against the Company.
Note 15. Equity
As of June 30, 2025, the total number of shares which the Company shall have the authority to issue is five hundred and ten million (
Reverse Recapitalization and De-SPAC Merger
On April 4, 2025, The Company consummated a business combination with Classover DE and BFAC (the SPAC), resulting in a reverse recapitalization. As part of the transaction:
| · | ·Former Classover DE shareholders received |
| ○ | |
| ○ | |
| ○ |
| · | BFAC Sponsor received |
| · | Remaining BFAC IPO investors were issued |
| · |
| 21 |
| Table of Contents |
These equity issuances were part of the reverse recapitalization and accounted for in accordance with ASC 805-40. No goodwill or intangible assets were recorded. The conversion of convertible notes was accounted for in accordance with ASC 470-20, with no gain or loss recognized upon conversion.
Shares issued in connection with the Company’s Merger on April, 4, 2025:
|
| Common Share |
| |
|
|
|
| |
Holders of BFAC public shareholders – Class B |
|
|
| |
BFAC sponsors – Class B |
|
|
| |
Founder of Classover DE – Class A |
|
|
| |
Rest of Classover DE shareholders prior to merger – Class B |
|
|
| |
Convertible note holders of Classover Inc. prior to merger – Class B |
|
|
| |
Classover DE equity holders-Series A Preferred Shares |
|
|
| |
Total Class A common shares |
|
|
| |
Total Class B common shares |
|
|
| |
Total Series A Preferred Shares |
|
|
| |
PIPE Investment
On April 4 and April 14, 2025, a PIPE investor invested an aggregate of $
2024 Incentive Plan
In connection with the Reorganization Merger, the Company adopted the Equity Incentive Plan (the “2024 Incentive Plan”). The 2024 Incentive Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or equity-related cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, will be eligible for grants under the 2024 Incentive Plan.
The 2024 Incentive Plan provides for the future issuance of shares of the Company’s Class B Common Shares, representing 8% of the number of shares of the Company’s Common Stock outstanding following the Business Combination (after giving effect to the Redemption). Accordingly, the 2024 Incentive Plan is eligible to issue up to 3,268,668 Class B Common Shares.
| · | On April 17, 2025, |
| · | On April 28, 2025, |
Shares were measured at fair value on grant date under ASC 718. Compensation cost is recognized ratably over the vesting period. During the three and six months ended June 30, 2025, stock compensation cost were $
| 22 |
| Table of Contents |
Other equity transactions
On April 17, 2025,
On June 30, 2025, 415,131 Series A Preferred Shares were converted into an equivalent number of Class B common shares on a 1:1 basis. The conversion was accounted for as an equity-for-equity exchange under ASC 505. No gain or loss recognized.
On June 30, 2025, the Company acquired intellectual property using $
Note 16. Concentration of risk
Credit risk
The Company’s concentration of credit risk relates to financial institutions holding the Company’s cash. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The insurance coverage for cash deposits at each bank is $
Customer concentration risk
For the three and six months ended June 30, 2025 and 2024, no customer accounted for more than
Vendor concentration risk
For the three and six months ended June 30, 2025 and 2024, no vendor accounted for over
Note 17. Subsequent Events
On July 18, 2025, the Company held a special meeting of stockholders and approved an amendment to the Company’s amended and restated certificate of incorporation to increase the total number of shares of Class B Common Stock the Company is authorized to issue from
| 23 |
| Table of Contents |
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to Classover Holdings, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited financial statements and the notes related thereto. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors .
CLASSOVER’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are an online enrichment class platform that offers over 40 courses taught by experienced, independent educators. Our program caters to children aged 4 to 17, providing personalized attention and a supportive learning environment. Unlike traditional classes, we give students the unique opportunity to explore their interest in-depth via interactive, live streaming courses with flexible time slots. Although we have incurred continuing losses from operations and net losses in the past few years, our business has experienced continuous growth in sales. Our total revenue decreased by $214,963, or 23% from $940,611 for the three months ended June 30, 2024, to $725,648 for the three months ended June 30, 2025. Our gross profit decreased by $206,754, from $529,472 for the three months ended June 30, 2024, to $322,718 for the three months ended June 30, 2025. Gross profit margin decreased from 56% for the three months ended June 30, 2024 to 44% for the three months ended June 30, 2025. Our total revenue decreased by $284,232, or 16% from $1,825,896 for the six months ended June 30, 2024, to $1,541,664 for the six months ended June 30, 2025. Our gross profit decreased by $276,524, from $1,004,608 for the six months ended June 30, 2024, to $728,084 for the six months ended June 30, 2025. Gross profit margin decreased from 55% for the six months ended June 30, 2024 to 47% for the six months ended June 30, 2025, as a result of decreased revenue during 2025. We completed a merger with Battery Future Acquisition Corp. on April 4, 2025 and became a Nasdaq listed public company.
Business Model
We understand that it is easier to learn when students are interested, so we highlight variety in our business model. Our platform offers a wide breadth of affordable enrichment programs including language, science, technology, engineering, arts, mathematics, music, and many more. Since our platform handles enrollments, record keeping, and many other tasks that usually take up educators’ time, our educator can focus on sharing knowledge about topics they love with our students.
We analyze data gathered on our platform to better determine our students’ most relevant needs, helping us match them with relevant courses and learning paths, thereby driving higher satisfaction. Once a learner enrolls in a course, we strive to provide an effective learning experience through tutoring, assessments, Q&As, and interactive exercises.
We provide time-based subscriptions and credit-based subscriptions to our online courses. For time-based subscriptions, we provide students with unlimited access to our courses for a specified period of time. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance.
Key Factors Affecting Our Performance
Our results of operations and financial condition have been, and will continue to be, affected by a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and elsewhere in the Form 10-Q.
Ability to attract new registered users and paid subscribers
Our business model is dependent upon our ability to grow and maintain a large user base, and it also requires that we grow and keep registered users and paid subscribers. As of June 30, 2025 and December 31, 2024, we have 68,374 and 61,387 registered users, respectively.
| 24 |
| Table of Contents |
"Registered users" are individuals who have signed up and created an account on our platform. This group includes all users who access our services, regardless of whether they have made a financial commitment to our offerings. Registered users may take advantage of free trials, access limited content, or use basic features available at no cost. While registered users do not directly contribute to subscription revenue, they play a crucial role in the overall revenue strategy by expanding the potential market. They provide a pool of potential customers who can be converted into paying customers through targeted marketing and engagement strategies. Additionally, registered users might generate revenue through advertisements, in-app purchases, or by upgrading to paid plans.
"Paid subscribers," on the other hand, include those registered users who have opted for a subscription plan and have made a financial commitment to access our premium content and features. Paid subscribers also encompass customers who purchase lesson credit packages, allowing them to access specific lessons or courses without committing to a recurring subscription. These subscribers typically pay either a recurring fee, which can be monthly, quarterly, or annually, depending on the subscription model, or a one-time fee for lesson credit packages. Paid subscribers are the primary source of revenue for the Company. The consistent and recurring nature of subscription payments ensures a steady revenue stream, while lesson credit packages offer flexibility and contribute additional non-recurring revenue. This combination supports the Company's operational costs, development, and expansion plans.
Ability to retain existing paid subscribers and customer relationships
Our ability to increase our revenues and profitability will depend on the ability to retain our existing customers as well as to convert registered users to paid subscribers.
Ability to attract and retain high quality independent teacher contractors
We believe that students are attracted to us largely because of the high quality and wide selection of enrichment and academic lessons offered by our high quality independent teacher contractors, and that continuing to attract and retain many high quality educator partners will be an important factor in attracting registered users and paid subscribers and increasing our revenue over time. We believe that our reach, reputation, and compensation packages provide an attractive value proposition for educators to partner with us to develop and distribute enrichment content. To be the platform of choice for educator partners, we continue to invest in increasing the size and engagement of our user base, improving recommendation and personalization features, and developing marketing capabilities that drive higher conversions. As of June 30, 2025 and December 31, 2024, we have 1,051 and 936 educator partners working with us, respectively.
Operating Efficiency
Our ability to maintain and increase profitability also depends on our ability to effectively control our costs and expenses. The significant component of our cost of revenues is the compensation expense to our educators. We pay our educators based on the number of hours they teach. In addition, we initiated time limit on certain courses, which encouraged students to pick courses in a shorter period of time, which also lead to an increase in the number of students in each class. However, to ensure quality of our online courses, we generally maintain a student to teacher ratio within 6:1.
Key Components of Results of Operations
Revenues
We have two predominant sources of revenue: (i) time-based subscriptions and (ii) credit-based subscriptions to our online courses. Customers are required to pay in advance to enroll for courses. In 2023, we started generating consulting revenue by providing marketing consulting services to a related party.
Cost of revenues
Cost of revenue consists of streaming services, third-party payment processing fees, and compensation for teachers and certain employees.
| 25 |
| Table of Contents |
Selling expenses
Selling expenses consist primarily of advertising costs on social media platforms such as Google and WeChat.
General and administrative expenses
General and administrative expenses consist primarily of (i) compensation for our management and administrative personnel, (ii) expenses in connection with operation supporting functions such as legal, accounting, consulting, and other professional service fees, and (iii) office rental, depreciation, and other administrative related expenses.
Research and Development Expenses
Our research and development expenses include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
Results of Operations
For the three months ended June 30, 2025 and 2024
The following table summarizes our results of operations for the years presented. The results below are not necessarily indicative of results to be expected for future periods.
|
| For the Three Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
|
| (Unaudited) |
|
| (Unaudited) |
|
|
|
|
|
|
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Service revenues |
| $ | 725,648 |
|
| $ | 840,611 |
|
| $ | (114,963 | ) |
|
| -14 | % |
Consulting revenues (related party) |
|
| - |
|
|
| 100,000 |
|
|
| (100,000 | ) |
|
| -100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
| 725,648 |
|
|
| 940,611 |
|
|
| (214,963 | ) |
|
| -23 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
| 402,930 |
|
|
| 411,139 |
|
|
| (8,209 | ) |
|
| -2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues |
|
| 402,930 |
|
|
| 411,139 |
|
|
| (8,209 | ) |
|
| -2 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 322,718 |
|
|
| 529,472 |
|
|
| (206,754 | ) |
|
| -39 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
| 110,085 |
|
|
| 143,735 |
|
|
| (33,650 | ) |
|
| -23 | % |
General and administrative |
|
| 1,889,175 |
|
|
| 550,224 |
|
|
| 1,338,951 |
|
|
| 243 | % |
Research and development |
|
| 22,491 |
|
|
| 6,426 |
|
|
| 16,065 |
|
|
| 250 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
| 2,021,751 |
|
|
| 700,385 |
|
|
| 1,321,366 |
|
|
| 189 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations |
|
| (1,699,033 | ) |
|
| (170,913 | ) |
|
| (1,528,120 | ) |
|
| 894 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrants |
|
| (1,540,424 | ) |
|
| - |
|
|
| (1,540,424 | ) |
|
| 100 | % |
Change in fair value of crypto assets |
|
| 182,665 |
|
|
| - |
|
|
| 182,665 |
|
|
| 100 | % |
Change in fair value of convertible debt |
|
| (260,630 | ) |
|
| - |
|
|
| (260,630 | ) |
|
| 100 | % |
Financing cost |
|
| (473,500 | ) |
|
| - |
|
|
| (473,500 | ) |
|
| 100 | % |
Staking rewards |
|
| 6,548 |
|
|
| - |
|
|
| 6,548 |
|
|
| 100 | % |
Interest and other expense |
|
| (43,435 | ) |
|
| (1,906 | ) |
|
| (41,529 | ) |
| 2179 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
| (2,128,776 | ) |
|
| (1,906 | ) |
|
| (2,126,870 | ) |
|
| 111588 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) before provision for income taxes |
|
| (3,827,809 | ) |
|
| (172,819 | ) |
|
| (3,654,990 | ) |
| 2115 | % | |
Provision for income taxes |
|
| 38,360 |
|
|
| - |
|
|
| 38,360 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
| $ | (3,866,169 | ) |
| $ | (172,819 | ) |
| $ | (3,693,350 | ) |
| 2137 | % | |
Revenue
The summary information by revenue stream are as follows:
|
| For the Three Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
Service revenues |
| $ | 725,648 |
|
| $ | 840,611 |
|
| $ | (114,963 | ) |
|
| -14 | % |
Consulting revenues (related party) |
|
| - |
|
|
| 100,000 |
|
|
| (100,000 | ) |
|
| -100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
| 725,648 |
|
|
| 940,611 |
|
|
| (214,963 | ) |
|
| -23 | % |
Our total revenue decreased by $214,963, or 23% from $940,611 for the three months ended June 30, 2024, to $725,648 for the three months ended June 30, 2025.
The decrease in the revenue in the second quarter of 2025 as compared to the second quarter of 2024 was primarily attributable to the absence of consulting revenue and decrease in service revenues. In the fourth quarter of 2023, we added a new revenue stream by providing marketing consulting services to Genius Kid Class LLC, one of our related parties. Consulting revenue generated in the second quarter of 2024 was $100,000. We completed our consulting service obligation by the end of 2024. We are uncertain about future growth of consulting revenue as we have not secured any new consulting contracts yet as of June 30, 2025. As a result, no consulting revenue was generated in the second quarter of 2025. Service revenues decreased by $114,963, or 14%, from $840,611 for the three months ended June 30, 2024, to $725,648 for the three months ended June 30, 2025, driven by a decrease in credit-based subscriptions and number of courses delivered during the second quarter of 2025.
| 26 |
| Table of Contents |
Costs of Revenue
|
| For the Three Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
Compensation |
| $ | 371,866 |
|
| $ | 371,838 |
|
| $ | 28 |
|
|
| 0 | % |
Payment Processing Fee |
|
| 13,164 |
|
|
| 18,451 |
|
|
| -5,287 |
|
|
| -29 | % |
Streaming Services |
|
| 17,900 |
|
|
| 20,850 |
|
|
| -2,950 |
|
|
| -14 | % |
Total |
| $ | 402,930 |
|
| $ | 411,139 |
|
| ($8,209) |
|
|
| -2 | % | |
Cost of revenues decreased by $8,209, or 2%, from $411,139 for the three months ended June 30, 2024, to $402,930 for the three months ended June 30, 2025.
Payment processing fee decreased by $5,287, or 29%, from $18,451 for the three months June 30, 2024, to $13,164 for the three months ended June 30, 2025. The cost of streaming service decreased by $2,950, or 14%, from $20,850 for the three months June 30, 2024, to $17,900 for the three months ended June 30, 2025. The decrease in payment processing and streaming service expenses was due to decreased class sessions provided during the second quarter of 2025.
Gross profit margin
Our gross profit and gross profit margin from the two revenue streams are summarized as follows:
|
| For the Three Months Ended June 30, |
|
|
|
| ||||||
|
| 2025 |
|
| 2024 |
|
| Variance |
| |||
Service revenues |
|
|
|
|
|
|
|
|
| |||
Gross profit |
|
| 322,718 |
|
|
| 448,011 |
|
|
| (125,293 | ) |
Gross margin |
|
| 44 | % |
|
| 53 | % |
|
| -9 | % |
Consulting revenues (related party) |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| - |
|
|
| 81,461 |
|
|
| (81,461 | ) |
Gross margin |
|
| - |
|
|
| 81 | % |
|
| 19 | % |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 322,718 |
|
|
| 529,472 |
|
|
| (206,754 | ) |
Gross margin |
|
| 44 | % |
|
| 56 | % |
|
| -12 | % |
| 27 |
| Table of Contents |
The total gross profit margin decreased from 56% for the three months ended June 30, 2024 to 44% for the three months ended June 30, 2025, as a result of decreased revenue during the second quarter of 2025.
Our gross margin of service revenue decreased from 53% for the three months ended June 30, 2024 to 44% for the three months ended June 30, 2025, mainly due to lower student enrollment in 2025.
Operating expenses
During the three months ended June 30, 2025, we incurred total operating expenses of $2,021,751, an increase of $1,321,366, or 189%, as compared to a total of $700,385 during the three months ended June 30, 2024.
General and administrative expenses increased by $1,338,951, or 243% from $550,224 for the three months ended June 30, 2024, to $1,889,175 for the three months ended June 30, 2025. Our general and administrative expenses include compensation related to the administrative personnel, amortization and depreciation expenses, rent, and other general expenses.
Other general expenses increased by $1,062,068 from $96,562 for the three months ended June 30, 2024, to $1,158,630 for the three months ended June 30, 2025. The increase was primarily attributable to higher consulting fees, regulatory registration expenses, and insurance as we completed a merger with Battery Future Acquisition Corp. (“BFAC”) in this quarter.
Employee compensation expenses increased by $121,197 from $347,458 for the three months ended June 30, 2024, to $468,655 for the three months ended June 30, 2025. The increase is primarily driven by additional hiring during the second quarter of 2025 to support our growth. In addition, there was an upward adjustment to executive compensation, further contributing to the overall compensation growth.
Employee stock compensation was $137,277 for the three months ended June 30, 2025. There was no employee stock compensation in 2024.
Interest and other expenses for the three months ended June 30, 2025, were $2,128,776 as compared to $1,906 for the three months ended June 30, 2024. The increase was primarily attributable to the financing cost and change in fair value of warrants, convertible notes, and crypto assets.
Provision for income taxes
Provision for income taxes for the three months ended June 30, 2025 was $38,360. We had no income tax provision for the three months ended June 30, 2024 as we made fully allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.
Net Loss
As a result of the combination of factors discussed above, our net loss increased from $172,819 for the three months ended June 30, 2024 to $3,866,169 for the three months ended June 30, 2025.
| 28 |
| Table of Contents |
For the six months ended June 30, 2025 and 2024
The following table summarizes our results of operations for the years presented. The results below are not necessarily indicative of results to be expected for future periods.
|
| For the Six Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Service revenues |
| $ | 1,541,664 |
|
| $ | 1,625,896 |
|
| $ | (84,232 | ) |
|
| -5 | % |
Consulting revenues (related party) |
|
| - |
|
|
| 200,000 |
|
|
| (200,000 | ) |
|
| -100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
| 1,541,664 |
|
|
| 1,825,896 |
|
|
| (284,232 | ) |
|
| -16 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
| 813,580 |
|
|
| 821,288 |
|
|
| (7,708 | ) |
|
| -1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenues |
|
| 813,580 |
|
|
| 821,288 |
|
|
| (7,708 | ) |
|
| -1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 728,084 |
|
|
| 1,004,608 |
|
|
| (276,524 | ) |
|
| -28 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing |
|
| 231,512 |
|
|
| 256,594 |
|
|
| (25,082 | ) |
|
| -10 | % |
General and administrative |
|
| 2,462,714 |
|
|
| 1,059,126 |
|
|
| 1,403,588 |
|
|
| 133 | % |
Research and development |
|
| 28,798 |
|
|
| 24,918 |
|
|
| 3,880 |
|
|
| 16 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
| 2,723,024 |
|
|
| 1,340,638 |
|
|
| 1,382,386 |
|
|
| 103 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations |
|
| (1,994,940 | ) |
|
| (336,030 | ) |
|
| (1,658,910 | ) |
|
| 494 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrants |
|
| (1,540,424 | ) |
|
| - |
|
|
| (1,540,424 | ) |
|
| 100 | % |
Change in fair value of crypto assets |
|
| 182,665 |
|
|
| - |
|
|
| 182,665 |
|
|
| 100 | % |
Change in fair value of convertible debt |
|
| (260,630 | ) |
|
| - |
|
|
| (260,630 | ) |
|
| 100 | % |
Financing cost |
|
| (473,500 | ) |
|
| - |
|
|
| (473,500 | ) |
|
| 100 | % |
Staking rewards |
|
| 6,548 |
|
|
| - |
|
|
| 6,548 |
|
|
| 100 | % |
Interest and other expense |
|
| (44,735 | ) |
|
| (3,878 | ) |
|
| (40,857 | ) |
| 1054 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
| (2,130,076 | ) |
|
| (3,878 | ) |
|
| (2,126,198 | ) |
|
| 54827 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) before provision for income taxes |
|
| (4,125,016 | ) |
|
| (339,908 | ) |
|
| (3,785,108 | ) |
| 1114 | % | |
Provision for income taxes |
|
| 38,360 |
|
|
| - |
|
|
| 38,360 |
|
|
| 100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) |
| $ | (4,163,376 | ) |
| $ | (339,908 | ) |
| $ | (3,823,468 | ) |
| 1125 | % | |
| 29 |
| Table of Contents |
Revenue
The summary information by revenue stream are as follows:
|
| For the Six Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Service revenues |
| $ | 1,541,664 |
|
| $ | 1,625,896 |
|
| $ | (84,232 | ) |
|
| -5 | % |
Consulting revenues (related party) |
|
| - |
|
|
| 200,000 |
|
|
| (200,000 | ) |
|
| -100 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
| 1,541,664 |
|
|
| 1,825,896 |
|
|
| (284,232 | ) |
|
| -16 | % |
Our total revenue decreased by $284,232, or 16% from $1,825,896 for the six months ended June 30, 2024, to $1,541,664 for the six months ended June 30, 2025.
The decrease in the revenue was primarily attributable to the absence of consulting revenue and the increase in service revenues. In the fourth quarter of 2023, we added a new revenue stream by providing marketing consulting services to Genius Kid Class LLC, one of our related parties. Consulting revenue generated in the first quarter of 2024 was $100,000. Consulting services were provided over the past nine months. We completed our consulting service obligation by the end of 2024. We are uncertain about future growth of consulting revenue as we have not secured any new consulting contracts yet as of June 30, 2025. As a result, no consulting revenue was generated in 2025. Service revenues decreased by $84,232, or 5%, from $1,625,896 for the six months ended June 30, 2024, to $1,541,664 for the six months ended June 30, 2025, which is primarily attributable to a decrease in credit-based subscriptions and number of courses delivered in 2025.
Costs of Revenue
|
| For the Six Months Ended June 30, |
|
|
|
|
|
|
| |||||||
|
| 2025 |
|
| 2024 |
|
| Variance Amount |
|
| Variance % |
| ||||
Compensation |
| $ | 743,256 |
|
| $ | 740,113 |
|
| $ | 3,143 |
|
|
| 0 | % |
Payment Processing Fee |
|
| 29,974 |
|
|
| 38,920 |
|
|
| -8,946 |
|
|
| -23 | % |
Streaming Services |
|
| 40,350 |
|
|
| 42,255 |
|
|
| -1,905 |
|
|
| -5 | % |
Total |
| $ | 813,580 |
|
| $ | 821,288 |
|
| ($7,708) |
|
|
| -1 | % | |
Cost of revenues decreased by $7,708, or 1%, from $821,288 for the six months ended June 30, 2024, to $813,580 for the six months ended June 30, 2025.
Payment processing fee decreased by $8,946, or 23%, from $38,920 for the six months June 30, 2024, to $29,974 for the six months ended June 30, 2025. The cost of streaming service decreased by $1,905, or 5%, from $42,255 for the six months June 30, 2024, to $40,350 for the six months ended June 30, 2025. The decrease in payment processing and streaming service expenses were due to decreased class sessions provided during the second quarter of 2025.
| 30 |
| Table of Contents |
Gross profit margin
Our gross profit and gross profit margin from the two revenue streams are summarized as follows:
|
| For the Six Months Ended June 30, |
|
|
|
| ||||||
|
| 2025 |
|
| 2024 |
|
| Variance |
| |||
Service revenues |
|
|
|
|
|
|
|
|
| |||
Gross profit |
|
| 728,084 |
|
|
| 833,834 |
|
|
| (105,750 | ) |
Gross margin |
|
| 47 | % |
|
| 51 | % |
|
| -4 | % |
Consulting revenues (related party) |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| - |
|
|
| 170,774 |
|
|
| (170,774 | ) |
Gross margin |
|
| 100 | % |
|
| 85 | % |
|
| 15 | % |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 728,084 |
|
|
| 1,004,608 |
|
|
| (276,524 | ) |
Gross margin |
|
| 47 | % |
|
| 55 | % |
|
| -8 | % |
The total gross profit margin decreased from 55% for the six months ended June 30, 2024 to 47% for the six months ended June 30, 2025, as a result of decreased revenue during 2025.
Our gross margin of service revenue decreased from 51% for the six months ended June 30, 2024 to 47% for the six months ended June 30, 2025, mainly due to lower student enrollment.
Operating expenses
During the six months ended June 30, 2025, we incurred total operating expenses of $2,723,024, an increase of $1,382,386, or 103%, as compared to a total of $1,340,638 during the six months ended June 30, 2024.
General and administrative expenses increased by $1,403,588, or 133% from $1,059,126 for the six months ended June 30, 2024, to $2,462,714 for the six months ended June 30, 2025. Our general and administrative expenses include compensation related to the administrative personnel, amortization and depreciation expenses, rent, and other general expenses.
Other general expenses increased by $1,126,812 from $203,147 for the six months ended June 30, 2024, to $1,329,958 for the six months ended June 30, 2025. The increase was primarily attributable to higher professional consulting fees, regulatory registration expenses, insurance as we completed a merger with Battery Future Acquisition Corp. (“BFAC”).
Employee compensation expenses increased by $113,787 from $649,767 for the six months ended June 30, 2024, to $763,555 for the six months ended June 30, 2025. The increase is primarily driven by additional hiring during 2025 to support our growth. In addition, there was an upward adjustment to executive compensation, further contributing to the overall compensation growth.
Employee stock compensation was $137,277 for the six months ended June 30, 2025. There was no employee stock compensation in 2024.
Interest and other expenses for the six months ended June 30, 2025, were $2,130,076 as compared to $3,878 for the six months ended June 30, 2024. The increase was primarily attributable to the financing cost and change in fair value of warrants, convertible notes, and crypto assets.
Provision for income taxes
Provision for income taxes for the six months ended June 30, 2025 was $38,360. We had no income tax provision for the six months ended June 30, 2024 as we made fully allowance on the deferred tax assets as we have determined that it is not more likely than not that the assets will be realized.
| 31 |
| Table of Contents |
Net Loss
As a result of the combination of factors discussed above, our net loss increased from $339,908 for the six months ended June 30, 2024 to $4,163,376 for the six months ended June 30, 2025.
Liquidity and Capital Resources
As of June 30, 2025, we had cash and cash equivalents of $5,978,572. Cash consists primarily of cash on hand and bank deposits. The Company maintains cash deposits with financial institutions that may exceed federally insured limits at times. The following table shows the breakout between cash on hand and bank deposits:
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| June 30, 2025 |
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| December 31, 2024 |
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Cash on hand |
| $ | 3,146 |
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| $ | 3,144 |
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Bank deposits |
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| 5,975,426 |
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| 47,538 |
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Total cash shown in the Statement of Cash Flows |
| $ | 5,978,572 |
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| $ | 50,682 |
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The accompanying consolidated financial statements have been prepared applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. As of June 30, 2025, the Company had cash of $5,978,572, current liabilities of $4,585,015, a working capital of $1,400,847 and a stockholders’ equity of $2,704,703. For the three months ended June 30, 2025 and 2024, the Company had losses of $3,866,169 and $172,819, respectively, and for the six months ended June 30, 2025 and 2024, the Company had losses of $4,163,376 and $339,908, respectively. The continuing losses raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time.
The Company completed business combination with Battery Future Acquisition Corp on April 4, 2025 and received $1,075,936 from BFAC’s trust account. Additionally, the Company received an aggregate of $4,700,000 from PIPE investors following the business combination, and entered into an equity purchase facility agreement (the “FPFA”) with Solana Holdings for up to an aggregate of $400 million in newly issued shares of the Company’s Class B common stock. Moreover, on May 30, 2025, the “Company entered into a Securities Purchase Agreement with an investor and the Company may sell to the investor up to an aggregate of $500 million in newly issued Notes. On June 6, 2025, the Company consummated the initial closing of $11 million of Notes. Management of the Company has evaluated the mitigation plans and determined that the current working capital, cash position, FPFA, and Notes available for future issuance are sufficient to support its continuous operations and to meet its payment obligations when liabilities fall due within the next twelve months from the date of issuance of these combined and consolidated financial statements. Accordingly, the Company’s combined and consolidated financial statements are prepared on going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due.
These financial statements do not include any adjustment relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue additional equity or debt securities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.
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| For the Six months ended June 30, |
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| 2025 |
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| 2024 |
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Net cash (used in) operating activities |
| $ | (624,777 | ) |
| $ | (306,309 | ) |
Net cash (used in) investing activities |
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| (2,300,000 | ) |
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| (136,394 | ) |
Net cash provided by financing activities |
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| 8,852,667 |
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|
| 100,000 |
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Change in cash and cash equivalents |
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| 5,927,890 |
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| (342,703 | ) |
Cash and cash equivalents, beginning of year |
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| 50,682 |
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| 787,652 |
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Cash and cash equivalents, end of year |
| $ | 5,978,572 |
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| $ | 444,949 |
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Operating Activities
Net cash used in operating activities for the six months ended June 30, 2025, was primarily attributable to net loss of $4,163,376, decrease in operating lease liabilities of $154,885 as we made payment under the lease contract, decrease in deferred revenues of $240,112, and change in fair value of crypto assets of $182,665. Cash outflow was partially offset by the change in fair value of warrants of $1,540,424, increase in accounts payable of $1,513,002, change in fair value of convertible debt of $260,630, non-cash amortization of operating lease right-of-use assets $151,201, employee stock compensation of $118,444, and increase in accrued liabilities and other payables of $374,008.
Net cash used in operating activities for the six months ended June 30, 2024, was primarily attributable to net loss of $339,908, decrease in due to related party $170,765 as we repaid our related party for the amount due, and decrease in operating lease liabilities of $115,394 as we made payment under the lease contract. Cash outflow was partially offset by the non-cash amortization of operating lease right-of-use assets $145,419, stock compensation issued for consulting services $25,120 and increase in deferred revenues of $92,329 as we collected in advance from online class subscription.
Investing Activities
Net cash used in investing activities was $2,300,000 for the six months ended June 30, 2025. The decrease was primarily due to our purchases of crypto assets and intangible assets.
Net cash used in investing activities was $136,394 for the six months ended June 30, 2024. The decrease was primarily due to our purchases of property and equipment.
Financing Activities
Net cash provided by financing activities was $8,852,667 for the Six months ended June 30, 2025. The increase was mainly due to the issuance of promissory notes of $3,089,400, capital contribution from private placement of $4,700,000, and proceeds from the reverse recapitalization of $1,077,752.
Net cash provided by financing activities was $100,000, for the six months ended June 30, 2024. The decrease was mainly due to the issuance of convertible loan.
Critical Accounting Policies and Estimates
Accounting Principles—The consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States of America (GAAP).
Principles of consolidation—The consolidated financial statements include the financial statements of the Company and its subsidiary. All significant intercompany transactions and balances between the Company and its subsidiary are eliminated upon consolidation.
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Use of Estimates— The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, useful lives of property and equipment, valuation of deferred tax assets and liabilities, operating lease right-of-use assets and liabilities and deferred revenue. Actual results may differ materially from such estimates. Management believes that the estimates, and judgments upon which they rely, are reasonable based upon information available to them at the time that these estimates and judgments are made. To the extent that there are material differences between these estimates and actual results, the Company’s consolidated financial statements will be affected.
Revenue Recognition— The Company has Three predominant sources of revenue: time-based subscriptions, credit-based subscriptions to our online courses, and marketing consulting services.
Subscription Revenue
Customers are required to pay in advance to enroll for course. For time-based subscriptions, we are obligated to provide students with unlimited access to our course for a specified term. For credit-based subscriptions, we offer our students the flexibility to take courses at any time up to the limit of their prepaid balance. Each contract of the online education service is accounted for as single performance obligation which is satisfied ratably over the service period. We charge fixed fees to the services contracts. The proceeds collected are initially recorded as deferred revenue. For credit-based subscriptions, revenues are recognized proportionately as the courses are delivered. For time-based subscriptions, revenues are recognized on a straight-line basis over the subscription period from the date in which the students activate the courses to the date of expiration. Refunds are provided to the students who decide to withdraw from the subscribed courses within the course offer period and a proportional refund is based on the percentage of untaken courses to the total courses purchased. Historically, the Company has not experienced material refunds.
Consulting Revenue
The Company also generates revenue from consulting services. The Company’s consulting program is designed to teach startup founders within the education sector how to market their product, refine their course content, infrastructure, and business models, achieve market fit and operating efficiency, and scale the startup into a high growth education business. The Company’s performance obligation is to provide consulting services to startup founders for a specific term. Customers are required to prepay full consulting service charge, which is fixed and determinable, at contract inception to secure program spot, and revenue is recognized overtime on a straight-line basis through the service term.
Principal Agent Considerations—The Company makes its application available to be downloaded through third-party digital distribution service providers. Users who intend to enroll our courses are directed to third-party payment platforms before completing subscription with us. The Company evaluates the purchases via third-party payment processors to determine whether its revenues should be reported gross or net of fees retained by the payment processor. The Company is the principal in the transaction with the end user as a result of controlling, hosting, and integrating the delivery of the virtual items to the end user. The Company records revenue on a gross basis as a principal and records fees paid to third-party payment platforms as cost of revenues.
Deferred Revenue— Deferred revenue mostly consists of payments we receive in advance of revenue recognition. Revenue is recognized over the life of the subscription, or as the delivery of the pre-purchased class sessions. The Company classifies deferred revenue as a short-term liability on the balance sheets as the longest subscription plan is for twelve months and the remaining session are expected to be delivered within twelve months or less.
Cost of Revenue—Cost of revenue predominantly consists of streaming services, third-party payment processing fees, and wages for teachers and certain employees engaged in producing the revenue.
Property and Equipment—Property and equipment primarily includes computers and furniture are stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over 5 years.
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Leasehold improvements are amortized over the lesser of the life of the lease or the estimated useful life of the leasehold improvements. Costs related to maintenance and repairs that do not extend the assets’ useful life are expensed as incurred.
Investment accounts—Investment accounts consist of cash and crypto assets held for investment purposes. Cash is carried at cost, which approximates fair value due to its short-term nature. The Company has elected to use the weighted average cost (WAC) method to determine the cost basis for its initial recognition of crypto asset holdings. Under this method, the cost of crypto assets sold or exchanged is calculated using the weighted average cost per unit at the time of the transaction. This method is applied consistently across all crypto asset holdings. The Company measures the fair value of its crypto assets subsequently, with gains and losses from changes in the fair value of such crypto assets recognized in net income each reporting period. The Company establishes a deferred tax liability if the market value of crypto assets at the reporting date is greater than the average cost basis of the Company’s crypto holdings at such reporting date, and any subsequent increases or decreases in the market value of crypto assets increases or decreases the deferred tax liability. In determining the gain (loss) to be recognized upon sale, the Company calculates the difference between the sales price and carrying value of the crypto assets with WAC method.
Intangible assets—Intangible assets acquired by the Company are stated at cost less accumulated amortization (where the estimated useful life is finite) and impairment losses. Amortization of intangible assets with finite useful lives is charged to profit or loss on a straight-line basis over the assets’ estimated useful life, which is the period over which an asset is expected to be available for use. The estimates and associated assumptions of useful life determined by the Company are based on technical or commercial obsolescence, legal or contractual limits on the use of the asset, and other relevant factors. Both the period and method of amortization are reviewed annually. Intangible assets are not amortized while their useful lives are assessed to be indefinite. Any conclusion that the useful life of an intangible asset is indefinite is reviewed annually to determine whether events and circumstances continue to support the indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite is accounted for prospectively from the date of change and in accordance with the policy for amortization of intangible assets with finite lives as set out above.
Income Taxes—The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax asset or liability represents the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. A valuation allowance is established for any deferred tax asset for which it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company utilizes a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining whether evidence indicates that it is more likely than not that a position will be sustained if examined by a taxing authority.
The second step is to measure the tax benefit as the largest amount that is 50% likely of being realized upon settlement with a taxing authority. There were no amounts recorded at September 30, 2024 and 2023 related to uncertain tax positions.
Fair Value of Financial Instruments—The Company accounts for certain assets and liabilities at fair value in accordance with the accounting guidance applicable to fair value measurements and disclosures.
The carrying values of cash, cash equivalents, accounts payable, deferred revenues, interest payable, loan payable, due to related parties, operating lease liabilities and accrued liabilities and other payables are deemed to be reasonable estimates of their fair values because of their short-term nature.
Research and Development Costs— Research and development expenses include compensation-related expenses to the outsourced subcontractors for maintenance of our online learning platform.
Recent Issued Accounting Pronouncements
For a detailed discussion on recent accounting pronouncements, see Note 2 to the consolidated financial statements included elsewhere in the Form 8-K.
Contingencies—The Company records accruals for contingencies and legal proceedings expected to be incurred in connection with a loss contingency when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss, would be disclosed.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements including arrangements that would affect the Company’s liquidity, capital resources, market risk support and credit risk support or other benefits.
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Item 3 – Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4 – Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2025. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that during the period covered by this report, our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective at a reasonable assurance level and, accordingly, provided reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II - Other Information
Item 5 – Other Information
During the quarter ended June 30, 2025, no director or officer adopted or terminated any (i) “Rule 10b5-1 trading arrangement,” as defined in Item 408(a) of Regulation S-K intending to satisfy the affirmative defense conditions of Rule 10b5–1(c) or (ii) “non-Rule 10b5-1 trading arrangement,” as defined in Item 408(c) of Regulation S-K.
Item 6 – Exhibits
Exhibit No. |
| Description |
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101.INS |
| Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
| Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
| Cover Page Interactive Data File. The cover page XBRL tags are embedded within the Inline XBRL document. |
* Filed herewith
** These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CLASSOVER HOLDINGS, INC. |
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Dated: August 14, 2025 | By. | /s/ Hui Luo |
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| Hui Luo |
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| Chief Executive Officer |
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| (Principal Executive Officer) |
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Dated: August 14, 2025 | By. | /s/ Yanling Peng |
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| Yanling Peng |
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| Chief Financial Officer |
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| (Principal Financial Officer) |
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